Exco Technologies Q1 2026 Earnings Report

Exco Technologies EPS Results

• Actual EPS: C$0.13
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Exco Technologies Revenue Results

• Actual Revenue: $149.52 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Exco Technologies Announcement Details

• Quarter: Q1 2026
• Date: 1/28/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, January 29, 2026
• Conference Call Time: 10:00AM ET

Exco Technologies (TSE:XTC) Ltd is a designer, developer, and manufacturer of dies, moulds, components and assemblies, and consumable equipment for the die-cast, extrusion, and automotive industries. The company reports in two business segments namely, Casting and Extrusion segment and Automotive Solutions segment. It generates maximum revenue from the Automotive Solutions segment. The Automotive Solutions segment produces automotive interior components and assemblies primarily for seating, cargo storage, and restraint for sale to automotive manufacturers and Tier 1 suppliers. Geographically, it derives a majority of revenue from the United States.

Exco Technologies Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Solid start to fiscal 2026 with consolidated sales of CAD 149.5M (+4% YoY), net income of CAD 4.8M (EPS CAD 0.13) and quarterly EBITDA of CAD 17.4M (12% of sales).
• Positive Sentiment: Automotive Solutions posted a strong turnaround: sales +10% and pre-tax profit +37% to CAD 6.5M, driven by inventory normalization, favorable vehicle mix, productivity/automation gains that offset Mexico wage increases, and disciplined pricing on new programs.
• Negative Sentiment: Casting & Extrusion faced near-term headwinds—sales down 2% as die-cast tooling was hit by OEM pauses and a shift away from EV programs due to U.S. policy uncertainty—though quoting activity improved and tooling revenues are expected to recover late Q2 onward.
• Positive Sentiment: Capital allocation is shifting to harvesting prior investments: growth capex largely complete, FY26 capex guided to CAD 28M (vs CAD 36M prior year), free cash flow positive, net debt CAD 67.1M and CAD 59.8M of available liquidity.
• Positive Sentiment: Management emphasizes strategic advantages—USMCA-compliant footprint and onshoring tailwinds—plus ongoing innovation (3D-printed tooling, AI-driven automation) and an emerging AI/data-center extrusion market (low single-digit today, growing at double-digit rates).

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to Exco Technologies Limited first quarter results 2026. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, President and CEO, Mr. Darren Kirk.

[Darren Kirk, President and CEO at Exco Technologies Limited]

Thank you, Josh, and good morning to everyone joining us. Welcome to Exco Technologies fiscal 2026 first quarter conference call. I'll begin today with an overview of our operations and strategic progress. I will then hand it over to Matthew Posno, our CFO, to review the financial details for the quarter. Afterwards, I'll return to discuss our outlook before opening the call for questions. Before we proceed, I'd like to remind everyone that our discussion today contains forward-looking information. I ask that you refer to the cautionary notes included in yesterday's news release and in our continuous disclosure filings, which apply to today's discussion. We are pleased to report a solid start to fiscal 2026.

[Darren Kirk, President and CEO at Exco Technologies Limited]

In a global environment still characterized by economic fluidity and shifting trade policies, Exco delivered consolidated sales of almost CAD 150 million for the first quarter, an increase of 4% over the prior year. More importantly, we translated this top-line stability into bottom-line growth, with net income rising to CAD 4.8 million and earnings per share reaching CAD 0.13, up from CAD 0.11 a year ago. This performance underscores the resilience we have built into our business model, capitalizing on relatively stable vehicle production volumes while navigating tariff-related uncertainties. Our diversification strategy and our relentless focus on operational efficiency are bearing fruit. We are seeing incremental benefits of our intense capital investment cycle over the past few years as our newer facilities ramp up and our cost structures optimize.

[Darren Kirk, President and CEO at Exco Technologies Limited]

Let's look at our segments, starting with Automotive Solutions, where we saw a very encouraging turnaround this quarter. The segment posted a robust sales growth, increasing 10% over the same quarter last year. To add some color to this performance, we are seeing a return to normal in the inventory channels. If you recall, in the prior year quarter, we faced a significant headwind from customers destocking their accessory inventories. That pressure has abated, and we are now seeing a cleaner run rate that better reflects actual end market demand. This growth was further bolstered by relatively stable automotive production volumes in both North America and Europe, alongside a favorable vehicle mix. We have substantial content on larger SUVs and crossover platforms, and as these continue to sell well, we benefit. But the real story here is on the profitability side.

[Darren Kirk, President and CEO at Exco Technologies Limited]

Pre-tax profit surged 37% to CAD 6.5 million. This wasn't just about higher sales giving us better overhead absorption, though that certainly helped. It was about execution in the face of persistent inflation. As many of you know, labor costs in Mexico have been a structural challenge for the entire industry due to sharp government-mandated minimum wage increases. I am incredibly proud of how our management team have handled this. They didn't just absorb the cost, they offset it. Through aggressive productivity improvements and the development of new automation, we managed to keep our overall labor costs effectively flat compared to the prior year, despite those wage hikes. This is a significant operational win. We are also being much more disciplined on pricing. We do not chase volume for volume's sake.

[Darren Kirk, President and CEO at Exco Technologies Limited]

On new program launches, we are ensuring that our pricing reflects the reality of today's higher economic and input costs. This pricing discipline, combined with our stabilized cost structure, gives us confidence that we can sustain and improve these margins even if the broader global economy softens. Turning to the Casting and Extrusion segment. Sales for the quarter were CAD 70.2 million, down slightly by 2% compared to last year. It is important to flesh out the drivers here, as the top-line numbers mask some significant shifts in the market. Sales were negatively impacted by a sharp slowdown in die-cast molds, which was largely a reaction to the political landscape in the United States. When President Trump returned to office, many OEMs paused or even canceled then-current programs to assess the new regulatory and emissions landscape.

[Darren Kirk, President and CEO at Exco Technologies Limited]

Consequently, they pivoted aggressively away from pure EV platforms, which hurt our immediate pipeline of EV, EV programs, and have since refocused their efforts on hybrids and internal combustion engine vehicles. The good news is that the dust is settling. Tooling demand for these hybrid and ICE platforms has picked up substantially in the past quarter, and our quoting activity is currently very strong. Given that lead times in this business are approximately six months, we expect die-cast tooling revenues will begin to tick up late in Q2 and then continue to improve for the remainder of the year. While the EV timeline has shifted, electrification is continuing to move ahead, albeit at a slower pace. We remain confident that demand for giga and mega casting applications associated with EV will rise in the future from a number of customers.

[Darren Kirk, President and CEO at Exco Technologies Limited]

Beyond automotive powertrain and structural applications, we are seeing a pickup in die-cast demand in other sectors... We are seeing activity in marine, heavy trucks, energy, and even telecom, which provides additional growth drivers and helps diversify our revenue base. Finally, the onshoring of tooling remains a significant tailwind for us. As supply chains regionalize, we are extremely well-positioned to capture that volume as well. On the Extrusion side, the business continued to perform well. I'd like to add some color to the dynamics of this market, as it has proven to be incredibly resilient. There are many shock absorbers built into this industry. Because the ultimate applications for aluminum extrusions are so diverse, ranging from building and construction, to automotive, to consumer goods, weakness in one area is often offset by strength in another.

[Darren Kirk, President and CEO at Exco Technologies Limited]

But beyond that, there is a countercyclical dynamic that plays to our benefit. When general extrusion activity slows, extruders tend to accept shorter production runs and more complex jobs to keep their presses utilized. These complex short-run jobs are actually more tooling intensive, which drives incremental demand for our dies. Furthermore, in slower market conditions, we often see demand for our capital equipment items increase. Extruders use these quieter periods to focus on maintenance of their operations and upgrade to efficiency, which benefits our Castool business. Finally, we are seeing a powerful new demand vector emerging, the rise of artificial intelligence and data centers. These facilities generate an immense heat and require massive amounts of aluminum extrusion for cooling solutions, such as complex heat sinks and structural racking.

[Darren Kirk, President and CEO at Exco Technologies Limited]

As the build-out of this digital infrastructure accelerates, it is driving demand for high-precision aluminum extrusions, and by extension, our advanced tooling. Before I discuss capital allocation, I want to highlight something that underpins all of these results, the incredible culture of innovation we have fostered at Exco. Innovation is not just a department here. It is woven into our DNA, from product development to process automation. I am incredibly proud of my teammates across the company for driving these advancements. We are seeing this clearly in our leadership with additively produced tooling, but also in less visible, yet equally critical areas. For example, we are now utilizing machine learning and AI to automate complex programming tasks, reducing human error and speeding up our workflows. There are numerous examples like this across the company, where our teams are challenging the status quo.

[Darren Kirk, President and CEO at Exco Technologies Limited]

Whether it is deploying increased automation in our Automotive Solutions group, or utilizing 3D printing to solve complex cooling challenges for our die-cast customers, this culture of innovation is what allows us to stay ahead of the curve and deliver value even in challenging markets. With our major growth capital initiatives now largely complete, we are pivoting our capital allocation strategy. You will see capital spending trend below historical averages as we prioritize harvesting the returns from these investments. I will now turn the call over to Matthew to discuss the financial highlights in more detail.

[Matthew Posno, CFO at Exco Technologies Limited]

Thank you, Darren. Good morning, ladies and gentlemen. Consolidated sales for the first quarter ended December 31st, 2025, were CAD 149.5 million, compared to CAD 143.6 million in the same quarter last year, an increase of CAD 6 million or 4%. Foreign exchange movements increased sales by approximately CAD 1 million, primarily due to the strengthening of the Euro versus the Canadian dollar. Consolidated net income for the quarter was CAD 4.8 million, or CAD 0.13 per share, compared with CAD 4.2 million, or CAD 0.11 per share in the prior year quarter. The effective income tax rate for the quarter was 31.8%, compared to 35.8% last year, reflecting geographic mix, foreign tax rate differentials, and losses that cannot be tax affected for accounting purposes.

[Matthew Posno, CFO at Exco Technologies Limited]

Quarterly consolidated EBITDA was CAD 17.4 million, representing 12% of sales, compared to CAD 16.7 million, or 12%, in the prior year period. First quarter sales in the Automotive Solutions segment were CAD 79.3 million, up CAD 7.2 million, or 10% from the prior year quarter. The increase reflected relatively stable automotive production volumes in North America and Europe, new product launches, a favorable vehicle mix, and the impact of inventory destocking in the accessory channel during the prior year quarter. Sales should continue to benefit from recent and upcoming program launches, which will further increase content per vehicle, and quoting activity remains encouraging. Pre-tax profit for the Automotive Solution segment was CAD 6.5 million, an increase of CAD 1.8 million, or 37%, from the prior year quarter.

[Matthew Posno, CFO at Exco Technologies Limited]

The improvement was driven by higher volumes and favorable mix, supporting improved overhead absorption. Labor costs in Mexico remain an industry-wide challenge due to mandated wage increases. However, management continues to emphasize productivity initiatives and pricing discipline, particularly on new programs, to mitigate cost inflation. First quarter sales in the Casting and Extrusion segment were CAD 70.2 million, down CAD 1.3 million, or 2%, versus the prior year quarter. Favorable foreign exchange movements contributed approximately CAD 700,000 to sales. Extrusion tooling sales performed well year-over-year, supported by a diversified range of end markets, including building and construction, transportation, sustainable energy, and electrical components.

[Matthew Posno, CFO at Exco Technologies Limited]

Die-cast tooling sales declined as OEMs deferred new tooling, new program launches amid softer EV demand, regulatory uncertainty, and tariff-related considerations, with a shift toward hybrid and smaller internal combustion engine platforms. Quoting activity and orders for die-cast tooling improved during the quarter, and demand for Exco's additive or 3D printed tooling remained strong, particularly for larger, more complex applications such as giga press molds. The segment reported pretax profit of CAD 3.5 million, down CAD 200,000, or 6% from last year. The decline reflected lower volumes, unfavorable mix, higher direct labor and overhead costs, and increased depreciation. Performance at newer operations, including Castool greenfield facilities and Extrusion Germany, weighed on results, as these remained a focus area for improvements as operations scale. Management continues to emphasize pricing initiatives, operational efficiency, process standardization, and automation to support improved profitability over time.

[Matthew Posno, CFO at Exco Technologies Limited]

Corporate expenses for the quarter were CAD 1.9 million, compared to CAD 400,000 in the prior year quarter. The increase was driven primarily by foreign exchange losses related to the strengthening Canadian dollar on balance sheet accounts. Cash provided by operating activities was CAD 10.2 million, compared to CAD 10.4 million in the prior year quarter. Free cash flow for the quarter was CAD 4.8 million, up from CAD 3.8 million last year. Cash used in investing activities totaled CAD 4.5 million, compared to CAD 7.7 million in the prior year quarter. Growth capital expenditures were CAD 200,000, while maintenance CapEx totaled CAD 4.3 million. Following several years of elevated growth-related investments, management intends to moderate capital spending and focus on optimizing the performance of existing assets.

[Matthew Posno, CFO at Exco Technologies Limited]

Fiscal 2026 capital spending is forecasted CAD 28 million, compared to CAD 36 million in fiscal 2025. Exco ended the quarter with net debt of CAD 67.1 million, unchanged from September 30, 2025. The company had cash of CAD 24.6 million and CAD 59.8 million of available liquidity under its CAD 151 million committed credit facility, maturing March 2027. Exco remained in compliance with all financial covenants at quarter end. Our financial position remains strong and continues to provide flexibility to support strategic investments, dividends, and other opportunities as they arrive, arise. Sorry. That concludes my comments. We can now transition back to Darren for his closing remarks.

[Darren Kirk, President and CEO at Exco Technologies Limited]

Looking ahead, the macro environment remains complex, with uncertainty surrounding global trade policy, particularly regarding tariffs. However, I want to be very clear, our long-term confidence is unshaken. First, nearly all of Exco's products sold within North America comply with the USMCA rules of origin. We expect these compliant products to remain exempt from tariffs in the long term. Second, the broader push towards reshoring industrial manufacturing in North America is a powerful tailwind for us. As tariffs make offshore tooling less competitive, we expect to see increased demand for domestic and nearshore sourcing. We maintain a substantial manufacturing footprint in the US and in USMCA partners, countries like Mexico and Canada. The combination of policy-driven reshoring, the aging vehicle fleet, and our strong product positioning reinforces our positive outlook. We have the capacity, the technology, and the footprint to capture market share as these conditions stabilize.

[Darren Kirk, President and CEO at Exco Technologies Limited]

I would like to thank our shareholders for their continued support and our global team for their dedication and hard work in navigating this dynamic environment. Operator, we are now ready to take questions.

[Operator]

Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for questions. Our first question comes from Nick Corcoran with Acumen Capital Partners. He may proceed.

[Nick Corcoran, Analyst at Acumen Capital Partners]

Hi, guys. Just a couple questions for me. First, you mentioned that, extrusion is used in AI data centers. Can you comment on what percentage of your business this is and, and what potential growth rate might be going forward?

[Darren Kirk, President and CEO at Exco Technologies Limited]

Yeah. Good morning, Nick. So it's AI data centers is obviously an emerging end market for aluminum extrusions. It's in the low single digits currently, but you know, it's growing well into the double digits. So it remains a tailwind for the foreseeable future, but albeit the current demand usage is a relatively low amount.

[Nick Corcoran, Analyst at Acumen Capital Partners]

That's fair. And then, maybe switching gears, I know in the past you've talked about organic growth and potential for acquisitions. I'm wondering what your M&A pipeline looks like right now.

[Darren Kirk, President and CEO at Exco Technologies Limited]

So, the M&A pipeline is... It's not very robust, to be honest. We continue to look for tuck-in opportunities, but as we've kind of indicated, the real focus is harvesting the investments that we have made through the prior CapEx cycle. But we do certainly remain interested in looking out for acquisition activities. Our balance sheet remains very strong, and we have liquidity capacity to pursue that.

[Nick Corcoran, Analyst at Acumen Capital Partners]

Great. That's all for me. Thanks for taking my questions.

[Darren Kirk, President and CEO at Exco Technologies Limited]

All right, Nick. Thanks, Nick.

[Operator]

Thank you. I would now like to turn the call back over to Mr. Darren Kirk for any closing remarks.

[Darren Kirk, President and CEO at Exco Technologies Limited]

Okay. Well, thanks, everyone, for joining us today. We look forward to speaking again, when we release our Q2 results.

[Operator]

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Participants

Executives

• Darren Kirk, President and CEO
• Matthew Posno, CFO

Analysts

• Nick Corcoran, Analyst at Acumen Capital Partners